Trump’s policies are hurting the US game industry, say EA and Take-Two

President Donald Trump got elected with a promise to put “America first” — American corporations, American workers, American interests. But six months into his tenure, two of the video game industry’s biggest publishers remain frustrated with his administration’s policies.

During a panel at the 2017 Games for Change Festival yesterday, representatives for Electronic Arts and Take-Two Interactive discussed the Trump administration as it relates to their companies’ interests. Focusing their complaints on three significant issues across domestic and foreign policy — immigration, education and trade — they argued that the White House isn’t doing what’s best for the U.S. game industry.

Foreign talent

Immigration has been a central concern for Trump, dating back to the now-infamous announcement in June 2015 that he was running for president in part to prevent Mexico from sending criminals and drugs to America. Last week, the House of Representatives passed a spending bill that included $1.6 billion of taxpayer funds to put toward the construction of a wall along the Mexican border, which was one of Trump’s most prominent campaign pledges — although he promised to make Mexico pay for it. And today, he backed a bill from two Republican senators that would cut legal immigration in half. Supporters of the legislation characterize it as shifting the country to a skills-based immigration system.

That could turn out to be a boon for the game industry, which focuses on employees with technical skills and advanced degrees — programmers, software engineers, designers, artists and the like. However, Trump signed an executive order in April that initiated a review of the H-1B visa program, which allows companies to bring “skilled” foreign workers into the U.S. for a few years. H-1B visas are limited to specialized fields like science and technology, including game development, and the government grants more than 100,000 of them every year. But the Trump administration’s review signals an intent to overhaul the H-1B program in the name of protecting American workers, which could involve restricting the number of visas issued.

“There is a constant shortage of qualified, high-skilled labor within our industry,” said Craig Hagen, global head of government affairs at Electronic Arts. Hagen added that the industry’s needs, particularly at large forward-looking companies like EA, are shifting from traditional positions like software engineers and game designers to roles requiring “higher-end skills” in advanced fields such as artificial intelligence and data analysis.

As it stands, though, the Trump administration’s stance on immigration — even if it seemingly prioritizes the kind of skilled labor that game developers are looking for — is having a negative impact for the game industry.

“Immigration continues to be a significant issue for companies like ours and the industry at large,” said Alan Lewis, vice president of corporate communications and public affairs for Take-Two. Lewis, who also sits on Games for Change’s board of directors, noted that the issue is twofold: Immigrants are less interested in coming to the U.S. to work because of the current political climate, and companies are having more trouble keeping immigrants in the country.

Trump’s “America first” rhetoric is actually starting to have the opposite effect, according to a recent Wall Street Journal report that Lewis cited. Canadian companies are taking advantage of the situation by stepping up recruiting efforts aimed at foreign workers and even Americans. The Canadian government is taking an active role as well, having recently revised its policies in an effort to reduce the amount of time that it takes to grant a foreigner a work permit.

Home schooling

Game companies want to hire the most skilled, talented people, wherever they come from. If the Trump administration’s immigration policies are making it harder for the game industry to import foreign workers, its education policies aren’t helping on the domestic side, according to EA’s Hagen.

STEM education (science, technology, engineering and math) is vital in developing the kinds of skills that game developers need. Hagen lamented the Trump administration’s position on education — that it’s best left to the states — and that the federal Department of Education doesn’t have a “widespread policy program” for STEM fields.

Trump announced last week that he was donating his second-quarter salary of $100,000 to the Department of Education, which will use the funds to hold a STEM-focused science camp for students. However, his administration’s proposed 2018 budget — which, granted, is unlikely to pass through Congress in its current form — calls for spending cuts of $9.2 billion, or 13.5 percent, across K-12 schools and higher education.

More issues at home and abroad

The panelists also touched on other concerns for their respective companies, such as domestic infrastructure and foreign trade.

The game industry is increasingly moving toward digital distribution and away from shipping retail games: Digital sales comprised a majority of total sales for both Take-Two (55 percent) and EA (61 percent) during their respective 2017 fiscal years, which both ended on March 31, 2017.

Hagen: the Trump administration has a “short-sighted isolationist attitude”

But that shift is hindered by the sorry state of broadband penetration in the U.S., which The Verge recently called a “stunningly uncompetitive market for wired internet access.” Ajit Pai, the new chairman of the Federal Communications Commission under Trump, favors deregulating the massive corporations that provide internet access to Americans. Instead of having the government level the playing field, Pai’s FCC believes it can spur private investment in broadband infrastructure by appeasing companies such as AT&T, Comcast and Verizon. (This is despite the fact that the stricter regulations that the Obama administration implemented didn’t cause the companies to reduce investment.)

Hagen said he wants to see an increase in broadband access for underserved areas, including poorer and rural communities. But at the moment, there’s not much of an incentive for companies to do that. And although the vast majority of Americans support allowing local governments to build their own broadband infrastructure, at least 20 states — prodded by lobbyists for telecom giants — have passed laws restricting municipal broadband networks.

The internet has facilitated the worldwide expansion of the video game market, but Hagen and Take-Two’s Lewis also took issue with the government on global business concerns. Hagen — making a point to note that he was expressing his personal opinion, and not EA’s — decried what he called the Trump administration’s “short-sighted isolationist attitude.” Although Trump has promised to negotiate trade deals that are more favorable for America, global commerce entails international cooperation, and world leaders are bristling at the administration’s attitude on trade.

Lewis: “Policy is playing catch-up to the technological innovations”

“The marketplace is going to drive the consumption of those products one way or another,” said Hagen, highlighting digital distribution as an avenue for selling games internationally.

At the same time, Lewis said Take-Two would like to see tax reform that serves American corporations. “The cost of doing business here in the United States has grown significantly,” said Lewis, adding that companies like Take-Two are concerned about how international revenue is taxed. Now that the effort to repeal and replace Obamacare has failed — for now, at least — tax reform is the Trump administration’s new area of focus, so changes could be coming soon. And an “America first” stance could provide more of what Lewis was suggesting.

The greater political issue for the game industry, which has undergone seismic changes in the past decade alone, is that it has to function under policies that often aren’t suited to modern technological and business realities. “Policy is playing catch-up to the technological innovations,” said Lewis. As always, there’s more work to be done in Washington.